When Steven Vicinanza got a letter in the mail earlier this year informing him that he needed to pay $1,000 per employee for a license to some “distributed computer architecture” patents, he didn’t quite believe it at first. The letter seemed to be saying anyone using a modern office scanner to scan documents to e-mail would have to pay—which is to say, just about any business, period.

If he'd paid up, the IT services provider that Vicinanza founded, BlueWave Computing, would have owed $130,000.

The letters, he soon found out, were indeed real and quite serious—he wasn't the only person getting them. BlueWave works mostly with small and mid-sized businesses in the Atlanta area, and before long, several of his own customers were contacting him about letters they had received from the same mysterious entity: "Project Paperless LLC."

"[Hill] was very cordial and very nice," he told Ars. "He said, if you hook up a scanner and e-mail a PDF document—we have a patent that covers that as a process."

It didn’t seem credible that Hill was demanding money for just using basic office equipment exactly the way it was intended to be used. So Vicinanza clarified:

"So you're claiming anyone on a network with a scanner owes you a license?" asked Vicinanza. "He said, 'Yes, that's correct.' And at that point, I just lost it."

Vicinanza made the unusual choice to fight back against Hill and “Project Paperless”—and actually ended up with a pretty resounding victory. But the Project Paperless patents haven’t gone away. Instead, they’ve been passed on to a network of at least eight different shell companies with six-letter names like AdzPro, GosNel, and FasLan. Those entities are now sending out hundreds, if not thousands, of copies of the same demand letter to small businesses from New Hampshire to Minnesota. (For simplicity, I'll just refer to one of those entities, AdzPro.)

Ars has acquired several copies of the AdzPro demand letter; the only variations are the six-letter name of the shell company and the royalty demands, which range from $900 to $1,200 per employee. One such letter, in which AllLed demands $900 per worker, is published below. The name of the target company has been redacted. Sources that provided the letters are concerned that speaking on the record about their case could result in additional attention or threats from the patent owners.Led Letter.final.redacted

Vicinanza’s experience puts him at the heart of a type of "patent trolling" that has taken off in the past year. The Project Paperless via AdzPro letter-writing campaign is a kind of lowest-common-denominator patent demand. Patent-licensing companies are going after the users of everyday technology rather than their traditional targets, the tech companies that actually make technology. This year, more than ever, trolls have moved beyond tech in a big way.

Smaller and smaller companies are being targeted. In a paper on “Startups and Patent Trolls,” Prof. Colleen Chien of Santa Clara University found that 55 percent of defendants to patent troll suits are small, with less than $10 million in annual revenue. Even in the tech sector, a full 40 percent of the time, respondents to patent threats are being sued over technology that they use (like scanners or Wi-Fi) rather than their own technology.

Project Paperless and its progeny don’t have any interest in going after the Canons and the Xeroxes of the world. After all, they have patent lawyers on payroll already and are in a far better position to push back. Rather, Hill wanted to collect royalties from BlueWave and its customers.

Project Paperless' spawn—AdzPro, AllLed, GosNel, and the others listed above—exemplify the new strategy. They send out vast quantities of letters, mainly to businesses that never could have imagined they’d be involved in any kind of patent dispute. They send them from anonymous and ever-changing shell companies. And at the end of the day, they either file only a few lawsuits—as Project Paperless did—or none at all, which has been the AdzPro strategy thus far.

“Going after the end users may ultimately be more lucrative for them,” said one patent litigator at a technology company that's closely monitoring the AdzPro situation. “If they extract a small amount from each possible end user, the total amount might well end up being a much larger sum than they could ever get from the manufacturers. The ultimate pot of gold could end up being much bigger."

"Atlanta's Best Workplaces" become a lot less fun

Steve Vicinanza.

As a services provider to other businesses—who often sold scanners as part of his package—Vicinanza was well-positioned to get some sense of the scope of the Project Paperless campaign. He personally had conversations with about a dozen recipients of the letters and he suspects that about 50 to 100 companies in the Atlanta area received a letter. Another batch was sent out in Virginia.

Vicinanza noticed a few of his customers who had been threatened had been on the “Atlanta’s Best Workplaces” list published annually by the Atlanta Journal-Constitution. The “best workplaces” list included the number of employees each business had, which would have been useful to Project Paperless lawyers in calculating their demands. These were always on a per-employee basis.

Working backward off the “best workplaces” list, Vicinanza was able to get in touch with several other Project Paperless targets, suggesting that Project Paperless lawyers were indeed targeting companies based on the list.

Reactions to the letters varied. “Without question, some people were livid,” said Vicinanza. “Some of the smaller ones were scared out of their wits, in addition to being livid.”

Some were ready to fight back, while others had no intention of doing so. One mid-sized Atlanta business in the process of being acquired by a major Silicon Valley tech company paid the Project Paperless demand, no questions asked. Some companies just ignored the letters; others talked to an attorney. It isn’t clear the companies that did speak to their lawyers about the situation actually fared better.

“The patent attorneys typically have a whole different set of objectives,” said Vicinanza. “Now they’re in settlement mode. If the company does end up getting sued and the lawyer said ‘ignore them,’ a company could find themselves paying treble damages. Even my attorneys told me, settle it, you’re crazy to fight.”

But that wasn’t Vicinanza’s style. “I’m an IT guy, so I read the patent—and I was just appalled that this could even be called a patent.”

Project Paperless has four patents and one patent application it asserts, all linked to an inventor named Laurence C. Klein. “It was a lot of what I’d call gobbledygook,” said Vicinanza. “Just jargon and terms strung together—it’s really literally nonsensical.”

Readers wishing to judge for themselves can take a look at the asserted patents, numbers 6,185,590, 6,771,381, 7,477,410 and 7,986,426. AdzPro also notes it has an additional patent application filed in July 2011 that hasn’t yet resulted in a patent. The patents may have been useless from a technologist’s perspective, but fighting them off in court would be no small matter.

“My lawyer said, even if you win, this case will cost a million dollars. I said, I don’t think it will—but I’d rather pay a million than pay these guys $200,000.”

In 15 years of being in business, BlueWave had never been involved in a lawsuit of any kind. “This sort of thing is detrimental to the whole industry,” said Vicinanza. “If everybody just rolls over, that just encourages them [patent trolls] to keep going.”

In March, the ball dropped and Project Paperless’ threats against BlueWave turned into an actual lawsuit. As he promised, Vicinanza didn’t settle. Instead, he spent $5,000 on a prior art search and sent the results to the Project Paperless lawyers. He also hired a new lawyer, Ann Fort, who filed a third-party complaint against four of the companies that actually made the scanners—Xerox, Canon, Hewlett-Packard, and Brother. That could have compelled the manufacturers to get involved in the case.

In the end, Hill and his fellow lawyers at his small Atlanta firm, Hill, Kertscher and Wharton, didn’t have a lot of fight in them. Two weeks after he filed the third-party complaint, Project Paperless dropped its lawsuit. No settlement, no deal—they just went away. (As a result, the scanner makers never actually came to court.)

When Project Paperless dropped its suit, that was the end for Vicinanza and Blue Wave. But Vicinanza was proud of standing up. He put out a press release describing his saga as a “small victory in the war against patent abuse.”

BlueWave’s win was hardly the end of the Project Paperless patents, however. Today, those patents are at the heart of an even more expansive campaign to get cash out of America’s small businesses for using everyday office equipment.

Steven Hill wouldn't comment on Project Paperless, saying only that his firm declined to discuss what was a “client matter.” Hill also refused to comment on the new entities sending out AdzPro letters today, or any links he and his partners have to those companies.

240 Reader Comments

Please allow me to introduce myselfI'm a man of wealth and tasteI've been around for a long, long yearStole many a mans soul and faithAnd I was round when jesus christHad his moment of doubt and painMade damn sure that pilateWashed his hands and sealed his fatePleased to meet youHope you guess my nameBut what's puzzling youIs the nature of my game

Looking at copyright, this does seem to be the next step of intellectual property enforcement. The optimist in me is hopeful it'll push forward patent reform. It's one thing to laugh about rounded rectangles when it's two corporate giants slugging it out, it's another thing when any company could be next up for extortion.

I'm guilty of violating a patent? ARE YOU KIDDING ME? Someone actually managed to secure a patent for what I would certainly consider an 'obvious' use for a particular machine??? Die patent trolls, DIE. Oh, and while you're at it, take your idiotic patent examiners with you.

The only right action is to expand the complaint to to manufacturers like BlueWave did. Even if these retarded patents did have some validity, the culpability would be with the makers of the hardware and software, not the end-users.

Bringing in the big guns and requiring them to have an opinion on the matter will squash troll like this pretty quick.

Personally, I'm somewhat baffled as to how ignoring the letters can have an average cost of around $3000...one would hope that ignoring the letters would lead to being forgotten about as not worth the time and money required to pursue your particular extortion settlement cash.

they’ve been passed on to a network of at least eight different shell companies with six-letter names like AdzPro, GosNel, and FasLan.

These names strangely resemble this quote from George Orwell's 1984:

Quote:

The name of every organization, or body of people, or doctrine, or country, or institution, or public building, was invariably cut down into the familiar shape; that is, a single easily pronounced word with the smallest number of syllables that would preserve the original derivation. In the Ministry of Truth, for example, the Records Department, in which Winston Smith worked, was called Recdep, the Fiction Department was called Ficdep, the Teleprogrammes Department was called Teledep, and so on.

I'm guilty of violating a patent? ARE YOU KIDDING ME? Someone actually managed to secure a patent for what I would certainly consider an 'obvious' use for a particular machine??? Die patent trolls, DIE. Oh, and while you're at it, take your idiotic patent examiners with you.

I think it meant a scanner than can email a PDF on its own. The scanner has to connect to the email somehow.

Shouldn't matter because this shouldn't even be a thing. What the hell.

1) You can't sue users of a device, technology, or media until AFTER you sue the company that provided it, or at least subpoena the company for records, purchases, etc. Any action thereafter targeting more than 20 individuals must be filed as a class first, and only if the judge refuses the class can you target individuals.

2) make it illegal to subpoena or send legal notice to individuals directly without express judicial approval if charges are being levied or damages/royalties are requested to be paid directly. When sending such letters, a bond must be placed for reasonable legal costs for each end every letter sent. Each letter must be sent with the full intent of courtroom prosecution. If it is determined that the suing party is unable to or unwiling to take at least half of the class to court, additionally posting a bond to cover court costs for at least that much prosecution, then the attempt to sue will be dismissed with prejudice.

3) you can't sue people for using a device that contains an infringing patent, you can only sue the company that MADE the device. Business methods can't BE patented, so you can't actually sue over that anyway even now.

4) Any legal team violating the above rules will be subject to disbarment pending hearing. Each letter sent invalidly with the attempt to collect damages without judicial oversight in place will be subject to an up to $100,000 fine per incident (per letter), plus treble of all legal costs and damages incurred by those receiving the letters, payable directly to the named entity/business. Any lawsuits filed related to patents in such a way, or over license rights, subjects the owner of those rights to immediate forfeiture of those rights/patents. If the rightholder feels the legal team operated without good faith, they can sue the lawfirm but their rights are still forfeit.

1. The Patent Office is granting patents far too easily. The standard for obtaining a patent needs to be raised and the standard for challenging one needs to be lowered.

2. People who don't use the patents in their operations needs to be excluded in any claims of damage.

3. The validity period of patents need to be reduced.

The problem is the backlog of patents (such as these) from the 90s. It helps to inform the patent office on technical matters, but there are still a huge amount of patents with questionable validity and you can't retroactively say the length of coverage is to be reduced.

I don't see how this could ever stand up in court, it seems the type of thing that would be tossed at pretrial.

Even if the patent itself had any merit, I don't see how end users could be sued. A photocopier comes with a button that says "scan to email". By pushing that button that came on a piece of equipment you bought, how can you be liable for violating some other companies patent.

In the worst case, the manufacturer of the copier would be the one in violation, but not the end users. They are just using an advertised feature of the product they bought.

Process patents have never been a good idea, they divorce the idea from the development of an actual invention. For instance, Eli Whitney lost his lawsuits against the competing cotton gin makers because their machines used different designs. If process patents had existed then, not only could he sue any company that implemented his process, he wouldn't have even needed to invent his own machine either. Why bother when you can just let someone else do the work and sue them later for the effort?

If you want to fix the patent system, the first step would be to revoke all process patents.

Patent reform is needed, but Congress is basically lazy (duh) they won't do anything they are not pushed into. If every Ars reader complained to his/her congressman whenever one of these stories came out, Congress might get the message -- otherwise, all they hear from is lobbyists.

But, on the other hand ...

Quote:

Should I write a letter to my Congressman? Each Congressman has two ends, A sitting and a thinking end. And since his whole success depends upon his seat, Why bother, friend? -- E. Y. Harburg

These patents will be very expensive to assert in court. Many priority claims and title transfers, each of which will have to be individually litigated with respect to each asserted claim before the merits of the claim, itself, are litigated. And all that before any question of infringement is reached. So, they go after those who cannot afford legal defense. If those defendants got together, they could all hire a good patent lawyer and split the cost. The trolls would go away.

These patents will be very expensive to assert in court. Many priority claims and title transfers, each of which will have to be individually litigated with respect to each asserted claim before the merits of the claim, itself, are litigated. And all that before any question of infringement is reached. So, they go after those who cannot afford legal defense. If those defendants got together, they could all hire a good patent lawyer and split the cost. The trolls would go away.

Exactly, what these trolls are failing to understand is every time they try to increase the effectiveness of their letters by distancing themselves from a name that got too well known they are making it that much harder to actually use them in litigation - but lets be honest, they already know that. I don't expect this particular troll to file any more lawsuits under any other names. But there will always be another.

There's a REALLY quick way to solve this. 1) You can't sue users of a device, technology, or media until AFTER you sue the company that provided it, or at least subpoena the company for records, purchases, etc. Any action thereafter targeting more than 20 individuals must be filed as a class first, and only if the judge refuses the class can you target individuals.

2) make it illegal to subpoena or send legal notice to individuals directly without express judicial approval if charges are being levied or damages/royalties are requested to be paid directly. When sending such letters, a bond must be placed for reasonable legal costs for each end every letter sent. Each letter must be sent with the full intent of courtroom prosecution. If it is determined that the suing party is unable to or unwiling to take at least half of the class to court, additionally posting a bond to cover court costs for at least that much prosecution, then the attempt to sue will be dismissed with prejudice.

3) you can't sue people for using a device that contains an infringing patent, you can only sue the company that MADE the device. Business methods can't BE patented, so you can't actually sue over that anyway even now.

4) Any legal team violating the above rules will be subject to disbarment pending hearing. Each letter sent invalidly with the attempt to collect damages without judicial oversight in place will be subject to an up to $100,000 fine per incident (per letter), plus treble of all legal costs and damages incurred by those receiving the letters, payable directly to the named entity/business. Any lawsuits filed related to patents in such a way, or over license rights, subjects the owner of those rights to immediate forfeiture of those rights/patents. If the rightholder feels the legal team operated without good faith, they can sue the lawfirm but their rights are still forfeit.Eliminate method patents completely.